Value, Growth At A Reasonable Price, Long-Term Horizon, Portfolio Strategy
Contributor Since 2012
I've been looking at the price correlation between REITs (VNQ) (O) and 20yr treasuries (TLT). Although short term rates remain close to zero due to FED policy, long term rates are moving up. I'm not sure there's a perfect correlation, but - at least in the short term - it does look like prices are moving in tandem.
I'm working under the assumption that - barring a catastrophic event - long term yield on the TLT will continue moving UP. Therefore, I'm not ready to buy REIT's at this particular time. If rates reach the 4.00% level (2011), and with a 2.50% premium over Realty Income , we'd be looking at a share price of $35. That's a lot of "if" and "when", but in my opinion it's just not worth the interest risk right now.